According to the Marshall-Lerner condition if a country’s currency depreciates its trade balance will worsen if ?

Related Mcqs:

1. The balance of trade can only worsen if income ____ relative to absorption ?

   A. increases
   B. decreases
   C. does not change
   D. None of the above

2. If Sweden’s currency depreciates relative to Norway’s currency ?

   A. Norway’s export goods become more expensive to Norway’s residents
   B. Norway’s exports goods become cheaper to Sweden’s residents
   C. Sweden’s export goods become cheaper to Norway’s residents
   D. Sweden’s export goods become cheaper to Sweden’s residents

3. Which approach predicts that is an economy operates a full employment and faces trade deficit currency devaluation will improve the trade balance only if domestic spending is cut thus freeing resources to produce exports ?

   A. the absorption approaches
   B. the Marshall Lerner approach
   C. the monetary approach
   D. the elasticities approach

4. Economic theory predicts that a currency depreciation will least lead to an improvement in the home country’s trade balance when ?

   A. home demand for imports is inelastic and foreign export demand is inelastic
   B. home demand for imports is elastic and foreign export demand is inelastic
   C. home demand for imports is inelastic and foreign export demand is elastic
   D. home demand for imports is elastic and foreign export demand is elastic

5. Assume that Country A is relatively abundant in labor and Country B is relatively abundant in land Note that wages are the returns to labor and rents are the returns to land According to the factor price equalization theorem, once Country A begins specializing according to comparative advantage and trading with Country B: A. wages and rents should fall in Country A B. wages and rents should rise in Country A C. wages should rise and rents should fall in Country A D. wages should fall and rents should raise in Country A ?

   XA. wages and rents should fall in Country A
   B. wages and rents should rise in Country A
   C. wages should rise and rents should fall in Country A
   D. wages should fall and rents should raise in Country A

6. If export contracts are written in terms of foreign currency and import contracts are denominated in domestic currency a depreciation of the dollar during the currency contract period ?

   A. should increase the dollar value of exports
   B. should not have any effect on the dollar value of U.S imports
   C. must increase the balance of trade
   D. All of the above

7. The notion that, following a currency depreciation the balance of trade falls for a while before increasing is called an effect ?

   A. relative price
   B. elasticity
   C. J Curve
   D. Pass through

8. Suppose that the United Kingdom devalues the pound if both exports and imports are written in terms of pounds then the United Kingdom balance of trade during a currency contract period ?

   A. improves
   B. worsens
   C. is unaffected
   D. falls for a while before increasing

9. Empirical evidence regarding in the effects of currency depreciation on the balance of trade indicates that?

   A. depreciation generally improves the trade balance
   B. depreciation generally hurts the trade balance
   C. no strong generalization is possible
   D. depreciation has no effect on the trade balance

10. Term a country’s decision to tie the value of its currency to another country’s currency gold or a basket of currencies ?

    A. Pagged exchanged rate
    B. Fixed exchange rate
    C. Relative exchange rate
    D. Knotted exchange rate